mcconnell dowell - aveng · from metro tunnels in singapore, geothermal energy production in new...

McCONNELL DOWELLInvestor Conference 19 & 20 October 2015

Breakwater Bridge Victoria

INVESTOR CONFERENCE │ 19 & 20 OCTOBER 2015

AGENDA

2

OVERVIEW

STRATEGY

MARKET

OUTLOOK Q & A

OPERATIONAL REVIEW

OVERVIEWWaterview Connection, Auckland, New Zealand3


OVERVIEW | Background to McConnell Dowell

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Scott CumminsChief executive officer

Where we operate23 locations throughout Australia, Asia, New Zealand, Pacific Islands and the Middle East.

Key geographies: Australia New Zealand & the Pacific South East Asia

Singapore ThailandPhilippines IndonesiaMalaysia Hong KongBrunei

ChinaShanghai

Middle East Dubai Saudi ArabiaAbu DhabiQatar

What we doMcConnell Dowell is a major engineering, construction and maintenance contractor experienced in delivering complex projects in the building, infrastructure and resources industry sectors.


OVERVIEW | Management team

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Dale MorrisonChief financial officer

Daryl YoungManaging director – Built Environs

Jim FrithExecutive general manager - Pipelines

Jim WallerExecutive general manager

John HearstExecutive director operations

Russell RooneyExecutive general manager – Tunnel & Underground

Wilma StuartExecutive general manager – Human Resources

Samantha JohnsonExecutive general manager - HSEQ


OVERVIEW |Business background

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With 5,600 employees and professional engineering and construction teams in Australia, New Zealand, Asia and the Middle East, our clients benefit from our unique mix of local knowledge and international experience

Since 1961, built thousands of quality assets and facilities for clients and communities

Expertise has grown steadily to span building, civil, electrical, fabrication, marine, mechanical, pipelines, rail, tunnel and underground construction

We engage in all types of business relationships, from fixed price contracts through to risk-reward based systems such as Early Contractor Involvement

Our culture is founded on expertise, creativity and progressive thinking

We constantly challenge ourselves and our partners to find the best solution for every project. This attitude, along with our safe, high-quality, systematic and structured approach, has earned us the trust and loyalty of our clients

The Creative Construction Company for

clients who want to build better

communities through safe,

smart, efficient infrastructure

Driving progress through more

than 50 years of creative

construction


THE FOUNDATION OF TODAY’S URBAN COMMUNITIES

From metro tunnels in Singapore, geothermal energy production in New Zealand, to award winning desalination plants in Australia, McConnell Dowell is building better communities through safe, smart, efficient transport, power and water infrastructure

MARKETS

POWER

WATER & WASTE WATER

TRANSPORT

THE BACKBONE OF ECONOMIES

McConnell Dowell is driving progress and supporting growth and prosperity in cities and rural communities through the delivery of new oil, gas and mining facilities, marine terminals, process plants and modules, cross-country pipelines and underground mines

MARKETS

MINING & METALS

OIL & GAS

PETROCHEMICAL

THE FABRIC OF OUR CITIES

Built Environs, our full-service building group, leads the way in delivering architecturally stunning and environmentally sustainable facilities. Including commercial, defence, accommodation, education, entertainment, government, health, industrial, office, retail, sport and transport related buildings

MARKETS

GOVERNMENT

COMMERCIAL / INDUSTRIAL

SOCIAL

OVERVIEW | Market sectors

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INFRASTRUCTURE RESOURCES BUILDING

We have a reputation for delivering what we promise in 3 key sectors:


OVERVIEW | Capabilities

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RAILEquipped with rail

plantDedicated plant yard

and workshopFull maintenance of

fleetWork on or near live

railways

MARINE Industry leaders Partner of choiceOver 50 years of

award-winning solutions for wharves, Jetties, Ocean outfalls, Breakwaters, Causeways and Submarine Pipelines Innovation is our

hallmark

TUNNEL & UNDERGROUNDRight technology

and approach Alleviate traffic

congestionExtend rail networksGenerate

sustainable hydropowerUnlock precious

resources Sustain communities

through new clean water supplies

PIPELINESLeading

international contractorExperts in large

diameter construction In-house specialist

skills and plantStrong client

collaboration Effective community

consultation Environmental management

FABRICATIONFully equipped steel

fabrication facilities Comprehensive and

integrated design, procurement construction and fabrication serviceProvide structural

steel and marine structures, steelwork and process piping, process modules and pre-assembled racks, concrete structures and concrete modules

MECHANICALDelivering complex

mechanical and electrical construction projects Specialist skills in oil

and gas, mining and minerals, chemical processing and waterComplex and

challenging projects under all contract models

BUILDINGBuilding projects

include those of Government, Social and Commercial / IndustrialWorking with Built

Environs provides clients with the benefits of the McConnell Dowell Group namely a strong balance sheet and 3rd party accredited systems


OVERVIEW | Safety

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A new approach to safety leadership development has been initiated

The workshop incorporates the shift away from lag indicators and ‘failure’, to a new Safety 2 concept of lead indicators, design/engineering solutions and hard controls

These initiatives have paid dividends with our ratio of potential for harm reports (hazards and near misses) to all injuries measuring 104:1 against a target of 50:1

Significant improvement on last year’s result of 49:1

Our lag indicators are also showing similar levels of improvement with our recordable injury frequency rate (RIFR) at 5.2 compared to 8.5 last year, and our lost time injury frequency rate (LTIFR) at 0.5 compared to 0.7

Per mil man hour


OVERVIEW | Achievements

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SAFETY ACHIEVEMENTS OTHER

Pipelines Received 30 industry awards for safety and

environmental success

McConnell Dowell have been selected as the 2015 finalists for the NSCA Foundation / GIO Workers Compensation National Safety Awards of Excellence in the following categories: Best Work Health and Safety (WHS) Training Program Best Communication of Safety Message

Top 20 Australian Gas Leaders Emerging companies of 2015

Riverbank pedestrian bridge Shortlisted for British Construction Industry Awards

Waitaki Bridges Replacement project recognised as finalist in the New Zealand Transport Authority (NZTA) GEM Awards for 2015

Built Environs received a prestigious SA Master Builders Association (MBA) Building Excellence Award

Two employees (Storm Nuttal and Winnie Zhu) of McConnell Dowell won awards at the National Association for Women in Construction (NAWIC) for Outstanding Contribution to Construction Award and Young Achiever Award for work done on the Roy Hill Iron Ore Project and FMG Rail projects.

Maintain Gold Standard employee satisfaction score

MARKET The Gold Coast Light Rail Project - Australia11


MARKET | Current market conditions

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Declining investment in infrastructure development exacerbated by the sharp decline in oil & gas prices and further reductions in iron ore and coal prices

Good opportunities in social and transport-related infrastructure projects

Competitive market conditions as a result of foreign entrants and decelerating workload

More onerous contracting conditions

Reasonable opportunities in Southeast Asia and strong growth in New Zealand

Construction spend reducing in Australia


MARKET | Opportunities

Overall McConnell Dowell is tracking approximately AUD8billion worth of projects

New project wins in Australia, New Zealand and South East Asia A few Built Environ projects in the pipeline:

o Campbell Baracks for Department of Defence o The Holiday Inn Express Hotel o Carmelite Views at Myrtle Bank SAo Calvary Private Hospital o Brougham Place

Despite the relative health of the pipeline, competition remains fierce across all regions

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MARKET | Opportunities per region & sector

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Key features of the opportunity pipeline are:

Australia remains the most active region with 45% of tender activity by value, followed by SEA (25%), New Zealand (25%) and Middle East (5%)

Transport remains the largest market by value (50%), followed by Oil & Gas (17%) and Water (15%). Compared to this time last year, the number of transport opportunities has almost doubled. Mining & Metals is now only 9% of the pipeline by value

D&C and EPC contracts are the most prevalent contract types at 53%, followed by Construct Only at 36%. This time last year Construct Only was the most prevalent contract type at 63%. D&C trend augers well for ability to develop differentiated offers

8%9%

17%

1%50%

15%

Work in Hand by Sector

Building Mining & MetalsOil & Gas PowerTransport Water

9%

33%

20%

6%

28%

4%

Revenue by Sector

OPERATIONAL REVIEWRapid Growth 5 & 6 Project Lift, Port Hedland, Western Australia15


OPERATIONAL REVIEW | New project wins

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NEW ZEALAND

NZ Transport Agency awarded McConnell Dowell a design and construct contract for a new, two-lane bridge at Kawarau Falls in Queenstown, New Zealand

McConnell Dowell Hawkins Joint Venture awarded the City Rail Link (CRL) Enabling Contract Two in Auckland, New Zealand

McConnell Dowell awarded contract by North Otago irrigation company for expansion of irrigation scheme

AUSTRALIA

McConnell Dowell has been awarded the Jetty Pipeline and Mechanical Works contract as part of the Port Bonython Fuels project in South Australia

McConnell Dowell Constructors (Aust) Pty Ltd has been awarded the contract to revamp the below ground pipework coating at 25 stations by APA Group

Contract awarded by Transport for NSW (TfNSW) to construct the Barangaroo Ferry Hub in Sydney

Modbury Hospital Redevelopment awarded by Department of Planning, Transport, Infrastructure (DPTI) & SA Health

SOUTH EAST ASIA

McConnell Dowell Indonesia has been awarded the Phase-2 Works by Donggi-Senoro LNG ("DSLNG") for the construction of the Condensate Export Facility


GEOGRAPHY Port Hedland, Western Australia

CLIENT Samsung C & T

PROJECT START October 2013

COMPLETION STATUS Current

MARKET Mining

CAPABILITIES Marine, Mechanical, Electrical

OVERVIEW Design and construction of the Port Marine Works, scope of work

includes an abutment, a drive station, three transfer stations and all SMPE&I (structural, mechanical, piping, electrical & instrumentation)

OPERATIONAL REVIEW | Key current projects

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ROY HILL


GEOGRAPHY Victoria Australia, Australia

CLIENT Australia's Port of Melbourne Corporation

PROJECT START January 2014


MARKET Transport

CAPABILITIES Marine works

OVERVIEW Construction of a wharf that will service the expanded world

class terminal, Deliver improved waterside infrastructure to Webb Dock


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WEBB DOCK


GEOGRAPHY Jurong Kechil, Singapore

CLIENT Singapore Land Transport Authority

PROJECT START March 2009


MARKET Transport

CAPABILITIES Tunnel & Underground

OVERVIEW The contract entails the design and construction of two MRT tunnels,

a new underground station including station entrances, subway links, architectural finishes and external landscaping. The new station will not only link commuters from the north western part of Singapore to the Marina Bay area, but it will also double as a civil defence shelter


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BEAUTY WORLD STATION


GEOGRAPHY Thailand

CLIENT PTT Public Company Limited


COMPLETION STATUS October 2015

MARKET Resources – Oil & Gas

CAPABILITIES Pipelines

OVERVIEW Construction of over 60km of 42 inch high pressure gas pipelines

and major facilities spread over 300km of challenging terrain and traversing six provinces of Thailand, between Nakhon in the north and Rayong in the south


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FOURTH PARALLEL TRANSMISSION PIPELINE


GEOGRAPHY Auckland, New Zealand

CLIENT NZTA

PROJECT START August 2011

COMPLETION STATUS Early 2017

MARKET Building

CAPABILITIES Tunnel & Underground

OVERVIEW Building two 2.4km long, 13.1m diameter bored tunnels up to

45m beneath central Auckland, Constructing The Great North Road Interchange - four ramps that total 1.7km in length to connect the South western and North western motorways


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WATERVIEW CONNECTION


OPERATIONAL REVIEW | Key business risks

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ORDER BOOK Decline in the order book - We continue to pursue and bid with conviction but competition is fierce

Strong focus on growth in our offshore locationsFocus on road and rail transport infrastructure, as well as available opportunities in the resources, defence and water sectors

RESTRUCTURING Recognise that we will be a smaller business in short term Given the nature of our business our numbersfluctuate and 2015 saw a considerable reduction from last year. This was mainly driven by the completion of some major projects and significant changes in market conditions impacting our work in hand

COST SAVING INITIATIVES Cost saving initiatives are in place Head count reduction in line with revenueNo non-critical travelTighter approvals around all discretionary spend Streamlining of management systems and procedures to reduce duplication and waste

GOLD COAST RAPID TRANSIT (GCRT)

Completion was achieved July 2014 subject to a list of close out items. As at September 2015 the GCRT claim has not been settled

Continuous efforts to finalise and resolve the claim, JV partner working with the client to get final sign off agreement

QCLNG The QCLNG arbitration hearing is scheduled to start in November 2015 and we are engaging with the client simultaneously in an effort to expedite a commercial settlement

Ongoing negotiations with the client

KEY ISSUE STATUS ACTION

Hume Dam, New South Wales, Australia23 STRATEGY


Structured approach to winning new work – immediate, emerging and future options (3 horizons)

Continued leverage of discipline & geographic diversity

Pre-contracts improvements through better bid decisions and estimating processes

Effective clean-up of legacy projects

Uncompromising delivery discipline on all current and new projects

Strong, positive cash flow and overheads maintained relative to work in hand

Foster a high performance, accountability driven culture based on our values

Reviewing the overall structure of the business in collaboration with the Executive Team in line with current market

Improved governance and review procedures – 3 lines of defence, start up audits, peer reviews, internal audit, project review process

Ongoing push to simplify our business, our processes and increase accountabilities

STRATEGY | Recover and Stabilise

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STRATEGIC THEME “RECOVER, STABILISE AND POSITION FOR GROWTH”

Foster a high performance driven culture based on our values

OUTLOOKThe Beauty World Station Project - Singapore25


OUTLOOK | Position for Growth

Continuing to adapt to the changed and challenging market conditions

Continued focus on winning new work in all regions

Pursuing attractive opportunities with a focus on transport (road, rail, bridges and ports) and commercial buildings

Well positioned for the next phase of major tunnelling developments, and ports and airports remain a key focus

Our Mechanical and Pipeline teams will continue to pursue available opportunities in the oil and gas, mining and water sectors

In building, Built Environs is well positioned to capitalise on opportunities in the defence, civic, retail, health, aged care, andresidential sectors

The future outlook for infrastructure in New Zealand looks very strong with transport and water and wastewater projects in Auckland and Christchurch dominant

Diversity remains the company’s strength – FY15 showed growth in SEA and NZ of + 50%, while Australia contracted significantly

Australia will continue to provide opportunities but is a high cost / risk environment

Strong focus on growth in our offshore locations – SEA, NZ Pacific and Middle East

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Waterview Tunnel video

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Breakwater Bridge Victoria

Q&AAPLNG Pipeline Project, Queensland28

ANNEXUREVirgin Pier, Perth Airport29


GEOGRAPHY Western Australia, Australia

PROJECT START February 2013

COMPLETION STATUS August 2015

MARKET Transport

CAPABILITIES Building

OVERVIEW Construction of the facilities to service the international and

domestic terminals and delivered underground services and structural foundation works

ANNEXURE | Past projects

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PERTH AIRPORT


GEOGRAPHY Western Australia, Australia

PROJECT START September 2011

COMPLETION STATUS May 2015

MARKET Mining

CAPABILITIES Marine works

OVERVIEW Construction of 2 additional iron ore export berths


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RAPID GROWTH PROJECT 6 MARINE WORKS


GEOGRAPHY Australia


COMPLETION STATUS June 2015

MARKET Transport

CAPABILITIES Marine

OVERVIEW Reconstruct seven modern, flood resilient terminals including a

new terminal at Milton and moorings at Dutton Park and St Lucia


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BRISBANE RIVER FERRY TERMINALS


GEOGRAPHY Queensland, Australia

PROJECT START June 2011

COMPLETION STATUS July 2014

MARKET Transport

CAPABILITIES Rail

OVERVIEW Construction of light rail system, Upgrade of underground

services, Construction of light rail stations, Construction of bridges, Landscaping and Urban design


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GOLD COAST LIGHT RAIL


GEOGRAPHY New Zealand

PROJECT START January 2011

COMPLETION STATUS June 2014

MARKET Power

CAPABILITIES Building

OVERVIEW Te Mihi is one of two new geothermal power stations planned for

the Taupo region, designed to replace the world's second largest power station - the 50 year old Wairakei Power Station


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TE-MIHI GEOTHERMAL POWER STATION


GEOGRAPHY Hong Kong, China

PROJECT START December 2011

COMPLETION STATUS October 2013

MARKET Oil & Gas

CAPABILITIES Pipelines

OVERVIEW Replace existing gas pipelines previously constructed by

McConnell Dowell 36 years ago


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